Register as a Sole Trader
If you start working for yourself, you're considered as self-employed even if you've not told HM Revenue and Customs (HMRC). You will run the business as an individual and not as a company, although you can still employ staff.
As a sole trader, you can keep all of your business's profits after you've paid tax on them, and you're personally responsible for any losses your businesses makes.
In this article
As a sole trader your must:
- send a Self Assessment tax return each year
- pay Income Tax
- pay National Insurance
- keep records of your finances and expenses
- register for VAT if you expect your turnover to be more than £83,000 a year.
* The difference in responsibilities of a sole trader are less administrative than a limited company.
Typical sole trader professions
- Painters & Decorators
- Makeup artists
Freelancers also tend to be sole traders as there are fewer responsibilities.
Benefits of a sole trader
The benefits of a sole trader are outlined as follows:
- any profits you make after taxes have been paid, is yours
- you have full control over your business
- you work for yourself
- less admin/accounting work
Challenges of being a sole trader
- if your business is in debt, you as the business owner will be liable
- if you don't work, you don't get paid
- all responsibilities fall on you unlike an LTD company
Naming your business
Your name can't be exactly the same as another registered company's name, so you will need to search the Companies House register to see if a name has been taken. The name also can't be too similar to another registered name, and the 'limited' or 'Ltd' is kept out of your company name.
You can register your business name as a limited company separately to reserve the name for the future from the following this link.
How to register
Sole traders must register with HM Revenue and Customs, and you'll need:
Need help registering?
We're currently unable to process sole trader applications at the moment.
This article is a general overview, and we do not offer professional advice. If you need professional advice, please speak to an accountant or business advisor.